Household spending increases for second month in a row
Make us a preferred source
Make us a preferred source on Google
The news: Household spending increased 0.6% in June, the second month in a row, according to CBA’s Household Spending Insights index.
The numbers: Recreation (3.2%) and hospitality(2.1%) were the big spending areas during the month.
However, on an annual basis spending remains lacklustre, with 3.9% growth over the year. Insurance, utilities and transport were the categories with the sharpest growth over the 12 month period.
The index has also revealed sharp differences between the spending behaviour of demographic groups, with renters seeing a 0.9% annual decline in spending to June but a 1.5% rise for mortgage holders and a 2.1% increase for those who own their home outright.
Some differences are emerging by location, with spending in the ACT topping the nation, up 1.5%, but Tasmania up just 0.3%. NSW and Victoria were up 0.7% and 0.5% respectively.
The context: Household spending is being closely watched during this higher inflation period, with recent monthly inflation data running hotter than expected. The official quarterly inflation data is due at the end of the month, which will be significant for the Reserve Bank and its upcoming August rate meeting.
What they said: “While it was somewhat surprising to see household spending rise for the second month in a row, we have witnessed a significant disparity in spending behaviours across home ownership categories, as renters pull back on spending in the year to June while mortgage holders and outright owners have increased spending,” said CBA chief economist Stephen Halmarick.
“This suggests younger Australians, who are more likely to be renting, are tightening their wallets and likely spending more on essentials, given these are the fastest growing spending categories so far this year,” he said.
The source: CommBank’s Household Spending Insights index
